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Oil pact with Australia promises billions for East Timor

SYDNEY — The foreign ministers of Australia and East Timor signed a treaty on Thursday allowing their countries to share billions of dollars in revenue from oil and natural gas reserves beneath the sea that divides them.

Australia's foreign minister, Alexander Downer, said the accord would pave the way for a multibillion-dollar energy project called Greater Sunrise that will bring revenues of as much as $4 billion to East Timor over the life of the liquefied natural gas project and up to $14.5 billion over 20 years.

Woodside Petroleum oversees the Sunrise gas field, thought to be the richest in the Timor Sea. Its partners stopped work on the project at the end of 2004 because of the absence of a governmental agreement on administering the field.

"Exploitation of the Greater Sunrise reservoirs and the additional revenue provided for under this treaty will assist in securing East Timor's development and prosperity," Downer said.

The treaty adds to revenue East Timor will receive under a previous deal covering part of the Timor Sea known as the Joint Petroleum Development Area.

Woodside and its partners won't resume work on Sunrise until the accord has been ratified by the parliaments of Australia and East Timor and an agreement has been reached with the East Timorese government on the financial terms for the life of the project, said a spokesman for the Perth-based company, Roger Martin.

"We're shying away at the moment from putting any sort of timetable on the Sunrise development," Martin said. "We obviously welcome the deal, but there are obviously some further steps that need to be taken."

Ending months of acrimonious negotiations, Australia and East Timor also agreed to shelve for 50 years a long-running dispute over the Timor Sea maritime boundary that separates them, said José Teixeira, East Timor's secretary of state for natural resources.

East Timor broke away from Indonesia in May 2002 after a 24-year armed struggle.

Australia had sought to keep the same border it negotiated with Indonesia, which occupied East Timor from 1975 to 1999. That border comes within 150 kilometers, or about 90 miles, of East Timor's coast in some areas and would place most of the natural resources in the Timor Sea under Australia's control.

East Timor wanted the border drawn in the middle of the 600 kilometers of ocean separating the two countries, placing a significant portion of the resources under East Timorese control.

"If for some reason Sunrise doesn't proceed and the agreement falls down, then the treaty comes to an end," Teixeira said. "It's a moratorium on exercising maritime boundary claims against each other."

As part of the deal, Australia and East Timor have set up a joint maritime commission, which includes an annual review of sea boundary issues, Teixeira said.

Australian lawmakers and rights advocates have accused the government of stealing revenue from East Timor by trying to claim the Greater Sunrise field. But East Timor's foreign minister, José Ramos-Horta, said the treaty was "a fair and just deal for the two sides."

"We are happy," he said. "This is what you call a win-win solution."

Woodside owns 33.4 percent of Sunrise Timor's southern coast. Its partners are ConocoPhillips, with 30 percent; Royal Dutch Shell, with 26.6 percent; and Osaka Gas of Japan, with 10 percent.